Patent Update: Direct Purchaser has Standing to Bring Walker Process Antitrust Action

This article was authored by friend of the Firm: Greg M. Popowitz, Esq., Patent Attorney

A recent decision by the Federal Circuit in Ritz Camera v. Sandisk Corp. confirmed that a direct purchaser of goods has standing to bring a Walker Process antitrust claim against a patentee, despite not being able to seek declaratory relief under applicable patent law.   The Court utilized a 1965 decision by The Supreme Court, Walker Process v. Food Machinery,which held that antitrust liability could attach if a patentee obtained or preserved a monopoly by using a patent procured though intentional fraud on the United States Patent and Trademark Office (“USPTO”).   Ritz Camera maintains a channel of access to direct purchasers of goods seeking to challenge a patent owner through an antitrust action despite having no other basis to seek a declaratory judgment holding a patent invalid or unenforceable.

Sandisk Corporation, a producer of NAND flash memory products, argued that Ritz Camera did not have standing to bring a Walker Process antitrust claim since Ritz Camera did not face a threat of a patent infringement action and had no basis to bring a declaratory judgment action challenging two of Sandisk’s patents.  Ritz Camera alleged that Sandisk failed to disclose known prior art and made affirmative misrepresentations to the USPTO during patent prosecution.

Typically, defendants will assert a Walker Process counterclaim in response to an allegation of patent infringement.  However, The Supreme Court placed no limitation on the class of plaintiffs that could bring Walker Process claims.  One of the elements of a Walker Process claim is showing that the patentee procured the patent through knowing and willful fraud on the USPTO.  Merely invalidating the patent was not sufficient; Walker Process required a showing of intentional fraud in procurement.

Moreover, the Court made clear that an antitrust claim under the Clayton Act was not a claim under patent law.  Rules defining who can challenge the validity of a patent under patent law should not be imported into the boundaries of antitrust standing.  A patent is a monopoly provided to an inventor for a specific period of time in return for public disclosure of the inventor’s invention.  An action under antitrust law requiring a proof of fraud in patent procurement should be governed by antirust standing rules, not patent law.

Contrary to Sandisk’s arguments, allowing direct purchasers to bring Walker Process claims would not be an end-run around patent laws.  It merely allows direct purchasers of goods to bring an antitrust action against a monopoly.  The alleged victim of the monopoly is the appropriate party to challenge the monopoly.  This decision will not result in a flood of Walker Process claims nor would it provide an end-run around patent laws.  The direct purchaser bringing the antitrust claim would still have to prove the patentee intentionally defrauded the USPTO.

In sum, the Federal Circuit confirmed that direct purchaser of goods have standing to pursue a Walker Process antitrust claim.

If you are a direct purchaser of goods and think the patent covering those good may have been procured by fraud, please contact the attorneys at Assouline & Berlowe, P.A.

This article was submitted and posted with consent of our friend Greg M. Popowitz, Esq.

Eric N. Assouline, Esq.

ena@assoulineberlowe.com

ASSOULINE & BERLOWE, P.A.

213 E. Sheridan Street, Suite 3

Ft. Lauderdale  – Dania Beach, FL 33004

http://www.assoulineberlowe.com

Miami – Ft. Lauderdale – Boca Raton

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